International Public Sector Accounting Standards
Encyclopedia
International Public Sector Accounting Standards (IPSAS) are a set of accounting standards issued by the IPSAS Board for use by public sector entities around the world in the preparation of financial statements. These standards are based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
). The IPSASB adopts a due process for the development of IPSAS that provides the opportunity for comment by interested parties including auditors, preparers (including finance ministries), standard setters, and individuals. IPSASB meetings to discuss the development and to approve the issuance of IPSAS or other papers are open to the public. Agenda papers, including the minutes of the meetings of the IPSASB, are published on the IPSASB's website: www.ipsasb.org. Observers on the IPSASB meetings include ADB
, EU
, IASB
, IMF
, INTOSAI, OECD
, UN
, UNDP
and the World Bank
.
(IFRS), formerly known as IAS. IFRS are issued by the International Accounting Standards Board (IASB). IPSASB adapts IFRS to a public sector context when appropriate. In undertaking that process, the IPSASB attempts, wherever possible, to maintain the accounting treatment and original text of the IFRS unless there is a significant public sector issue which warrants a departure.
s on the accrual basis of accounting and one standard on the cash basis of accounting (source: IPSAS Handbook published March 2011).
, ADB
) provide a substantial amount of funding for the work of IPSASB. Other sources of revenue for the development of IPSASs include funding from international, national and regional government entities. In addition, IFAC (International Federation of Accountants
) and the CICA (Canadian Institute of Chartered Accountants
) support the IPSASB activity.
), Programmes and Funds (such as UNDP, UNICEF and UNHCR), Specialized Agencies (such as FAO
, ICAO, ILO
, UNIDO, UNESCO
and WHO
) and Related Organizations (such as IAEA, OPCW, the World Trade Organization
, and the World Meteorological Organization
) aim to be IPSAS compliant.
Accounting standards are based on French GAAP for the private sector, IFRS and IPSAS. Standards are issued by the Conseil de normalisation des comptes publices (Advisory counsil on public sector accounting standards).
[ftp://ftp1.perbendaharaan.go.id/produk/dia/lkpp/lkpp_2008_english.pdf Download Indonesia Central Government's Financial Statements 2008]
The Agency for financial support of agriculture and rural development, as well as the National fund within the Ministry of Finance use IPSAS accrual basis for the purposes of reporting to the European Commission on the use of the IPARD (Instrument for pre-accession assistance in rural development) funds.
The New Economic Model for Malaysia, which was unveiled in 2 parts in 2010, has outlined a number Strategic Reform Initiatives ("SRIs") in support of the Economic Transformation Programme, as well as various policy measures forming the bedrock of these SRIs. The adoption of accrual accounting by the public sector was listed as one of these policy measures. This recommendation has immediately prompted the Performance Management and Delivery Unit ("PEMANDU") to bring on board some of the best and brightest amongst the public sector accountants and academia, as well as technical experts representing related bodies such as the Malaysian Institute of Accountants
and the Malaysian Accounting Standards Board to draw up the transition roadmap through a six-week laboratory session. According to the roadmap, accrual accounting will be adopted in the financial reporting by the public sector with effect from 1 January 2015, using bases and policies which are consistent in all material respect with accrual basis IPSAS.
Objective
IPSAS aims to improve the quality of general purpose financial reporting by public sector entities, leading to better informed assessments of the resource allocation decisions made by governments, thereby increasing transparency and accountability.Scope
IPSAS are accounting standards for application by national governments, regional (e.g., state, provincial, territorial) governments, local (e.g., city, town) governments and related governmental entities (e.g., agencies, boards and commissions). IPSAS standards are widely used by intergovernmental organizations. IPSAS do not apply to government business enterprises.Due process
IPSAS are issued by IPSASB (International Public Sector Accounting Standards Board), an independent organ of IFAC (International Federation of AccountantsInternational Federation of Accountants
International Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
). The IPSASB adopts a due process for the development of IPSAS that provides the opportunity for comment by interested parties including auditors, preparers (including finance ministries), standard setters, and individuals. IPSASB meetings to discuss the development and to approve the issuance of IPSAS or other papers are open to the public. Agenda papers, including the minutes of the meetings of the IPSASB, are published on the IPSASB's website: www.ipsasb.org. Observers on the IPSASB meetings include ADB
Asian Elephant
The Asian or Asiatic elephant is the only living species of the genus Elephas and distributed in Southeast Asia from India in the west to Borneo in the east. Three subspecies are recognized — Elephas maximus maximus from Sri Lanka, the Indian elephant or E. m. indicus from mainland Asia, and E. m....
, EU
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, IASB
International Accounting Standards Board
The International Accounting Standards Board is an independent, privately funded accounting standard-setter based in London, England.The IASB was founded on April 1, 2001 as the successor to the International Accounting Standards Committee...
, IMF
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
, INTOSAI, OECD
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
, UN
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
, UNDP
United Nations Development Programme
The United Nations Development Programme is the United Nations' global development network. It advocates for change and connects countries to knowledge, experience and resources to help people build a better life. UNDP operates in 177 countries, working with nations on their own solutions to...
and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
.
Convergence of IPSAS with IFRS
IPSAS are based on the International Financial Reporting StandardsInternational Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
(IFRS), formerly known as IAS. IFRS are issued by the International Accounting Standards Board (IASB). IPSASB adapts IFRS to a public sector context when appropriate. In undertaking that process, the IPSASB attempts, wherever possible, to maintain the accounting treatment and original text of the IFRS unless there is a significant public sector issue which warrants a departure.
Language of IPSAS
The approved text of IPSAS standards is that published by the IPSASB in the English language. The IPSASB Handbook has been translated from English into a number of languages, including French http://www.ifac.org/Store/Details.tmpl?SID=1128371456348737&Cart=12029312791279768, Spanish http://www.ifac.org/Store/Details.tmpl?SID=1127422706413866&Cart=12029312791279768, German, Russian and Chinese. The Arab Society of Certified Accountants (ASCA) of Jordan issued an Arabic http://www.ascasociety.org/publication_order.aspx?orderID=108&lang=en version of the IPSASB Handbook. In addition, Brazil is working on translation of IPSAS into Portuguese. See http://www.ifac.org/Translations/database.php for more information.Features of IPSAS
There are 31 standardStandard
A technical standard is an established norm or requirement about technical systems. It is usually a formal document that establishes uniform engineering or technical criteria, methods, processes and practices. In contrast, a custom, convention, company product, corporate standard, etc...
s on the accrual basis of accounting and one standard on the cash basis of accounting (source: IPSAS Handbook published March 2011).
- When the accrual basis of accounting underlies the preparation of the financial statementsFinancial statementsA financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
, the financial statements will include:- the statement of financial position (IPSAS 1),
- the statement of financial performance (IPSAS 1),
- the cash flow statementCash flow statementIn financial accounting, a cash flow statement, also known as statement of cash flows or funds flow statement, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing...
(IPSAS 2), - the statement of changes in net assets/equity (IPSAS 1),
- the notes to the financial statementsNotes to the Financial StatementsNotes to financial statements are additional notes and information added to the end of financial statements to supplement the reader with more information. Notes to financial statements help the computation of specific items in the financial statements as well as provide a more comprehensive...
, or annex (IPSAS 1).
- When the cash basis of accounting underlies the preparation of the financial statements, the primary financial statement is
- the statement of cash receipts and payments.
Funding
Multilateral development banks (World BankWorld Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, ADB
African Development Bank
The African Development Bank Group is a development bank established in 1964 with the intention of promoting economic and social development in Africa...
) provide a substantial amount of funding for the work of IPSASB. Other sources of revenue for the development of IPSASs include funding from international, national and regional government entities. In addition, IFAC (International Federation of Accountants
International Federation of Accountants
International Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
) and the CICA (Canadian Institute of Chartered Accountants
Canadian Institute of Chartered Accountants
The Canadian Institute of Chartered Accountants was incorporated by a Private Act of the Canadian Parliament in 1902. This Act, now known as the Canadian Institute of Chartered Accountants Act, was last amended in 1990 to reflect the CICA’s current mandate and powers.Working in collaboration with...
) support the IPSASB activity.
The impact of the credit crisis on public sector accounting
The credit crisis has raised several public sector accounting issues. Governments have extended credit to banks, guaranteed the liabilities of banks, purchased impaired debt instruments and in some instances have assumed control of banks. The unique nature of the credit crisis and the unprecedented response by governments around the world has reinforced the importance of high-quality standards for financial reporting by governments. The credit crisis has increased the need for accountability in the public sector and for transparency in its financial dealings.IPSAS Adoption by intergovernmental organizations
The following intergovernmental organizations have adopted IPSAS or are in the process of adopting IPSAS:- Commonwealth Secretariat: Adopted IPSAS as the basis for financial reporting from 1 July 2008 i.e. Financial Year 2008-2009. Source: Commonwealth Secretariat Website 2008-09 Audited Financial Statements (Page 5 under Accounting Policies). http://www.thecommonwealth.org/document/181889/34293/39128/171664/234661/audited_accounts.htm
- CoE (Council of EuropeCouncil of EuropeThe Council of Europe is an international organisation promoting co-operation between all countries of Europe in the areas of legal standards, human rights, democratic development, the rule of law and cultural co-operation...
): Issues IPSAS compliant financial statementsFinancial statementsA financial statement is a formal record of the financial activities of a business, person, or other entity. In British English—including United Kingdom company law—a financial statement is often referred to as an account, although the term financial statement is also used, particularly by...
since 2007. - EC (European CommunitiesEuropean CommunitiesThe European Communities were three international organisations that were governed by the same set of institutions...
): Issues IPSAS-similar financial statements since 2005. - ESA (European Space AgencyEuropean Space AgencyThe European Space Agency , established in 1975, is an intergovernmental organisation dedicated to the exploration of space, currently with 18 member states...
): Aims to be IPSAS compliant by January 1, 2010. - EUMETSAT (European Organisation for the Exploitation of Meteorologial Satellites): Aims to be IPSAS compliant with the production of the annual accounts 2012, in March 2013.
- INTERPOL (International Criminal Police Organization): From 2007 onwards, financial statements are prepared in accordance with INTERPOL's Financial Regulations and in compliance with IPSAS. If there is a divergence between IPSAS and INTERPOL's Financial Regulations, the INTERPOL Financial Regulations have been applied. Divergences are not deemed to be significant.
- NATO (North Atlantic Treaty Organization): Issues IPSAS financial statements since 2008.
- OECD (Organisation for Economic Cooperation and Development): Issues IPSAS-compliant financial statements since 2000, the first body in the world to do so.
● United Nations System
UN (United NationsUnited Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
), Programmes and Funds (such as UNDP, UNICEF and UNHCR), Specialized Agencies (such as FAO
Fão
Fão is a town in Esposende Municipality in Portugal....
, ICAO, ILO
Ilo
Ilo is a port city in southern Peru, with some 58,000 inhabitants. It is the largest city in the Moquegua Region and capital of the province of Ilo.-History:...
, UNIDO, UNESCO
UNESCO
The United Nations Educational, Scientific and Cultural Organization is a specialized agency of the United Nations...
and WHO
Who
Who may refer to:* Who , an English-language pronoun* who , a Unix command* Who?, one of the Five Ws in journalism- Art and entertainment :* Who? , a 1958 novel by Algis Budrys...
) and Related Organizations (such as IAEA, OPCW, the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
, and the World Meteorological Organization
World Meteorological Organization
The World Meteorological Organization is an intergovernmental organization with a membership of 189 Member States and Territories. It originated from the International Meteorological Organization , which was founded in 1873...
) aim to be IPSAS compliant.
- WFP (World Food Programme): WFP is the first United Nations agency to implement IPSAS. In its 2008 financial statements, WFP adopted all standards issued by the IPSAS BoardInternational Federation of AccountantsInternational Federation of Accountants is the global organization for the accountancy profession. IFAC has 164 member and associates in 124 countries and jurisdictions, representing more than 2.5 million accountants employed in public practice, industry and commerce, government, and academe...
including several standards prior to their effective date. - PNUD: Adoption in progress (2009/2012)
IPSAS Adoption by Country
Many governments say they are introducing IPSAS because it is considered to be good practice. However, very few governments have actually adopted the standards. In terms of the Cash Basis IPSAS not a single country in the world has actually adopted the standard. The main problem is the key requirement to produce consolidated financial statements for all controlled entities. Consolidating government business entities with ministries and departments would be very time consuming and almost all governments consider that it is not worth the very real costs.Afghanistan
Process in place to adopt IPSAS, first cash basis then accrual basis. Legislation passed.Abu Dhabi
Prepared 2010 financial statements in accordance with accrual accounting IPSAS for some departments and municipalities.Albania
Applies cash basis of accounting. Law requires modified cash basis of accounting (including accounts payable). Plans to adopt cash basis IPSAS with the possibility of applying accrual accounting IPSAS subsequently.Argentina
Process in place to develop public sector accounting standards that are harmonized with accrual accounting IPSAS.Armenia
In the process of gradual transition towards accrual basis IPSAS. Draft law on public sector accounting and draft accounting standards, policies, manual and chart of accounts have been designed.Australia
Adopted full accrual accounting standards, consistent with IPSAS. The Australian Accounting Standards Board (AASB) has issued 'Australian equivalents to IFRS' (A-IFRS). The AASB has made certain amendments to the IASB pronouncements in making A-IFRS, however these generally have the effect of eliminating an option under IFRS, introducing additional disclosures or implementing requirements for public sector entities, rather than departing from IFRS for Australian entities. Because of these amendments, the final standards as they apply to public sector entities, are very similar to IPSAS.Azerbaijan
The 2004 Law on Accounting requires the adoption of national public sector accounting standards based on IPSAS by public sector effective 1 January 2009. Applicable to municipalities, budget organizations and off-budget state funds, i.e. the State Oil Fund and the Social Security Fund.Bangladesh
The government of Bangladesh has expressed both commitment and willingness to adopt the cash basis IPSAS and has taken an initiative to prepare the financial statements in accordance with the cash basis IPSAS. The first set of IPSAS based statements for the core ministries (excluding specialized organizations) and the specialized organizations are planned to be produced by the fiscal year 2007-2008 and 2009-2010 respectively. The government considers the adoption of the cash basis IPSAS a point of departure towards implementing the accrual basis of accounting in the long run.Bhutan
The department of public accounts (DPA) has notified that it will develop Royal Government of Bhutan Accounting Standards by referring to the cash basis IPSAS. The government of Bhutan has expressed a commitment to adopting the cash basis IPSAS and studying the feasibility of gradually moving to accrual basis of accounting.Botswana
Member of ESAAG (East and Southern African Association of Accountants General). The aims of ESAAG member states include the adoption of the Cash-basis IPSAS.Chile
For several years the Chilean Public Sector has used accrual accounting, and “Contraloría General de la República” is leading a process to converge to IPSASColombia
The government of Colombia has made a commitment to IPSAS and is working on the convergence of its national accounting standards with international standards.Costa Rica
Government of Costa Rica mandated the use of IPSAS on October 11, 2007, by publishing Decree No. 34029-H. The process of adopting and implementing IPSAS has been undertaken by the preparation of the Official Accounting Framework for the financial and non-financial sectors of the public sector in Costa Rica.East and Southern Africa
The East and Southern African Association of Accountants General member states' aims include adoption of IPSAS. The association's member states are Botswana, Kenya, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Rwanda, South Africa, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe. Funding support is provided by the Swedish International Development Cooperation Agency.Fiji
Prepared 2009 financial statements in accordance with the cash basis IPSAS, including a consolidated statement of cash receipts and payments.France
Government has moved to accrual recently : Government financial statements were issued for the first time in 2006. They are audited by the Cour des Comptes (Public National Audit Office).Accounting standards are based on French GAAP for the private sector, IFRS and IPSAS. Standards are issued by the Conseil de normalisation des comptes publices (Advisory counsil on public sector accounting standards).
Gambia
In the process of adopting the cash basis IPSAS, will then move to adopt accrual basis IPSAS.Georgia
Central government currently prepares budget execution reports in accordance with the cash basis of accounting. In 2007 the minister of finance decided to adopt IPSAS for central and sub-national governments, starting with the Cash-basis IPSAS, gradually adding disclosures about assets and liabilities in order to subsequently arrive at accrual accounting IPSAS.Germany
The City of Hamburg takes IPSAS as well as IFRS and the German Handelsgesetzbuch (HGB) into consideration in preparing its accrual accounting financial statements.Ghana
Has adopted the cash basis IPSAS, is transitioning to the accrual basis IPSAS. However, government business enterprises are not consolidated.India
The Government Accounting Standards Advisory Board is in favor of limited adoption of cash basis IPSAS for cash transactions and corresponding accrual IPSASs for those transactions recorded on other than the cash basis. A road map has been prepared for transition from the cash to accrual accounting system and an operational framework for its implementation. The possible transition towards accrual accounting has been planned incremental and in phases spanning from 10–12 years. The central government and the majority of Indian state governments have accepted the idea of accrual accounting. The Committee on Accounting Standards for Local Bodies is reviewing IPSAS with a view to their adoption.Indonesia
IPSAS-compliant government accounting standards is in process.[ftp://ftp1.perbendaharaan.go.id/produk/dia/lkpp/lkpp_2008_english.pdf Download Indonesia Central Government's Financial Statements 2008]
Israel
On August 5, 2004 Government Resolution Number 2375 was passed as to the adoption and implementation of IPSAS by government ministries and by non-commercial statutory corporations. The Accountant General is currently leading a reform in the administration of State assets and liabilities involving the gradual adoption and implementation of IPSAS. A significant part of the data in the financial statements is presented according to Israeli Government Accounting Standards and IPSAS, but the statement of assets does not represent all the assets held by the State of Israel.Japan
A government in Japan adopted full accrual accounting, which is in line with IPSAS. Tokyo municipal government has started the preparation of accrual based financial statements applying IPSAS similar accounting policies. The financial statements of Tokyo are available from: http://www.kaikeikanri.metro.tokyo.jp/kessan(english).htm.Kazakhstan
The Government of Kazakhstan has announced that from January 1, 2013, the Republic of Kazakhstan will prepare and present public sector financial statements that comply in all material respects, with accrual basis International Public Sector Accounting Standards. Current financial reporting practice in the public sector is based on various decrees issued by the government, and the current proposal is to migrate directly to the IPSASs from the current basis. The migration process has been initiated by the Ministry of Finance with input from the National Bank.Kenya
Member of ESAAG (East and Southern African Association of Accountants General). The aims of ESAAG member states include the adoption of the Cash-basis IPSAS.Kyrgyzstan
The Kyrgyz Ministry of Finance is finalizing the transition to IPSAS in line with the Kyrgyz government’s approval of an action plan to reform accounting and financial reporting in the public sectorKosovo
Having adopted the cash-basis IPSAS in 2004, the Republic of Kosovo was among the first countries in the world to issue financial statements complying with the cash-basis IPSAS. However, government business enterprises are not consolidated. Many ministries show subsidies and transfers to these organisations, but they are not fully consolidated as required by the Cash IPSAS. These financial statements are available in English from: http://www.mef-rks.org/en/download/517-budget-reports-and-financial-statements.Kuwait
The Ministry of Finance of the State of Kuwait has a project in place to implement accrual accounting IPSAS.Latvia
Financial statements for central and local government and government related entities are accrual IPSAS compliant with one exception: tax revenue. Budget execution report are cash-based.Lesotho
Member of ESAAG (East and Southern African Association of Accountants General). The aims of ESAAG member states include the adoption of the Cash-basis IPSAS.Liberia
On November 19, 2009 the Liberian Minister of Finance, the Hon Augustine Ngafuan, announced the adoption of the Cash Basis IPSAS for all transactions involving the central Government of LIberia. The Minister also announced the Government's long term goal of adopting the accrual basis IPSAS. The Cash Basis IPSAS shall be applied to prepare government financial statements to cover the fiscal year July 1, 2009 to June 30, 2010, the government will migrate to the accrual basis IPSASs over a five year period. http://www.thenewsliberia.com/index.php?option=com_content&view=article&id=421:gol-adopts-new-public-sector-accounting-standard&catid=1:latest-news&Itemid=50Lithuania
Approved IPSAS accrual accounting standards and are preparing accrual accounting financial statements for 2010.Macedonia
In the process of adopting the cash basis IPSAS, will then move to adopt accrual basis IPSAS.The Agency for financial support of agriculture and rural development, as well as the National fund within the Ministry of Finance use IPSAS accrual basis for the purposes of reporting to the European Commission on the use of the IPARD (Instrument for pre-accession assistance in rural development) funds.
Malaysia
The Malaysian Federal Government has adopted the cash basis IPSAS. Its financial statements for the year ended December 31, 2005 were prepared in accordance with the cash basis IPSAS, were audited by the Supreme Audit Institution of Malaysia and received an unqualified audit opinion. However, government business enterprises are not consolidated.The New Economic Model for Malaysia, which was unveiled in 2 parts in 2010, has outlined a number Strategic Reform Initiatives ("SRIs") in support of the Economic Transformation Programme, as well as various policy measures forming the bedrock of these SRIs. The adoption of accrual accounting by the public sector was listed as one of these policy measures. This recommendation has immediately prompted the Performance Management and Delivery Unit ("PEMANDU") to bring on board some of the best and brightest amongst the public sector accountants and academia, as well as technical experts representing related bodies such as the Malaysian Institute of Accountants
Malaysian Institute of Accountants
The Malaysian Institute of Accountants is a statutory body responsible to regulate the accountancy profession in Malaysia. It is the sole organisation in Malaysia with the right to determine whether or not a person is qualified to be recognised as an accountant by virtue of the power provided by...
and the Malaysian Accounting Standards Board to draw up the transition roadmap through a six-week laboratory session. According to the roadmap, accrual accounting will be adopted in the financial reporting by the public sector with effect from 1 January 2015, using bases and policies which are consistent in all material respect with accrual basis IPSAS.